Market eyes rain for wheat crop

The market fundamentals finally include beneficial precip for most of the winter wheat states, from this past weekend.

Dry early this week and then more rains by late in the week is the expected weather. The 30 day outlook forecasted by our
World Weather meteorologist, Drew Lerner suggest above normal precip. The
Climate Prediction Center forecast the drought to persist through June. The
trade is aware of acres already lost to drought and fire. They are also
aware of how high prices have cost the USA wheat sales and competitors
interest is raising more wheat in 2006 due to those same high prices

Wheat Moving Average level for July wheat futures are as follows: CBOT's
SRWW ='s 3710-3820 & 3870, tonights close 3700, KCBT's HRWW ='s 4230-4370
& 4400, tonights close 4224, and MGEX Spring Wheat ='s 4270-4280 & 4290,
tonights close 4134. Our Allendale Advanced Charts does show and explain
the importance for CBOT's SRWW July futures to hold 3620, this weeks low.
Export Sales: We need to average at least 11.18 mil bu per wk for the
balance of the 2005/06 mkting yr in order to meet USDA's newest export
target of 1 bil bushels. Actual sales of 12.4 were on the low end of pre
release weekly export sales trade estimates of 300-550 K tonnes (11.0-20.2
million bushels). The shipment pace continues to lose ground and yet based
on the pace of shipments thus far in the marketing year, project to 32 mil
bu more than USDA projection of 1 billion bu.
Wheat acreage: Allendale estimates 57.966 million acres. This is the second
lowest planted acreage in 30 years. Last year's 57.229 million acres was
the lowest in that time frame. Using Allendale Inc. 43.23 bushel/acre trend
yield, it would imply wheat production of 2.122 billion bushels versus last
yr's 2.105 billion bushel production.

Quarterly Wheat Stocks: USDA will release its next quarterly grain stocks
report on March 31st along with its Prospective Plantings report. If wheat
is expected to continue its average historical use, look for stocks on and
off farm to register 977 mil bu. This would compare to yr earlier levels of
984 mb and 1,021 mb the year before. The three yr ave has been 970 mb.
Trade Position: after having met our long MGEX July wheat obj, new trader
recommendations have been posted on our Grain Trading Strategies page. Our
short KCBT wheat position achieved our objective Thursday. Our CBOT short
obj was met on Wednesday. New recco's have been written for CBOT SRWW and
KCBT July futures and found on the same Trading page.
Wheat-Corn Spread: Moore Research Center has a July KCBT/July corn spread
which may be entered on approximately 4/10 and exited near 6/25. Past 15 yr
history has shown 13 winning yrs and 2 losing. Over the past 15 yrs, Moore
Research identifies the worst equity draw down of $787 (1999), the best
equity amount of $4,850 on 4/25/96 and the best profit amount of $2,437.50
in 1996. The ave profit on winning trades of $750 and ave loss $606.25. One
word of caution is the spread has never been as high as it is at present
over the past 15 years for the month of March. In 2005 and in 1996 the
spread was entered at 1.06 prem the wheat which have been the highest
highs. In 2005 the profit was $125 and in 1996 $2,437.50. The spread does
appear to have good odds but with the current value of $1.90, the air up
here may be mighty thin.
50-50 Week: Our Historical Price Trends page has a litany of the major
grains with 50% odds for futures to close above and 50% odds for futures to
close lower with nearly identical risk to reward. If there was a week to
suggest trade the range, next week may be it.